Threshold Limit of Twenty lakh is Fixed

NEW DELHI: In a big step forward on GST implementation, the Centre and states today reached an agreement on keeping traders with annual revenue of up to Rs. 20 lakh out of the new national sales tax regime that will subsume all cesses.

While the two sides, at the meeting of the GST Council, agreed on the contentious issues of revenue threshold – below which traders will be exempted from GST, and sharing of administrative powers, the all crucial GST rates will be decided in the meeting to be held on October 17-19.

The newly constituted Council decided to keep the revenue exemption limit at Rs. 20 lakh for all states with the exception of north eastern and the hill states where the limit will be Rs. 10 lakh, Finance Minister Arun Jaitley said in New Delhi.
Resolving issues over dual control over small traders, it decided that states will have exclusive control over all dealers up to a revenue threshold of Rs. 1.5 crore in a year.

A mechanism would be worked out for traders above Rs. 1.5 crore to ensure that a dealer is regulated either by the Central government or the state government and not both.

Broad principles for compensating states for any loss of revenue when the new regime is rolled out from April 1, 2017 were also discussed at the two day meeting of the panel that is headed by Union Finance Minister and includes representatives of all states.

On service tax, it was decided that in absence of expertise with states, the Centre will continue to exercise control over all the 11 lakh service tax registered dealers irrespective of their revenue levels, he said.

Mr Jaitley said the next meeting on September 30 will finalise the draft rules regarding implementation of exemptions.

While 2015-16 will be the base year for calculating revenue compensating to states for any loss of revenue arising from rollout of GST, the final methodology will be worked out in next meetings, he said.

The exemption threshold fixed is lower than Rs. 25 lakh that most states had demanded. Some states were pitching for Rs. 10 lakh limit to limit their revenue loss.

The same for North-Eastern states is twice of the Rs. 5 lakh that was under deliberation till yesterday.

The exemption list has also been cut down to 90 items from the current 300 goods and services. Also, the meeting decided that all cesses will be subsumed in the GST, Mr Jaitley said.

At the end of two-day maiden meeting of the GST Council, Mr Jaitley said it was decided that state authorities will have jurisdiction over assessees with annual turnover of less thanRs. 1.5 crore.

For those with turnover of over Rs. 1.5 crore, there would be cross examination either by officers from the Centre or states to avoid dual control.

However, the power for assessment of 11 lakh service tax assessees who are currently assessed by the Centre, would remain with it. New assessees added to the list will be divided between the Centre and states.

“All items including cess would be included in GST,” Mr Jaitley said, adding that the Council is working on a compensation law and draft compensation formula.

The base year for calculating compensation would be 2015-16 and the formula for payment of compensation would be deliberated between the state and Central authorities.

The officials will give a presentation with regard to the compensation formula which can be adopted at the next meeting of the Council on September 30.

2 Comments

balachandran
on November 27, 2016 at 12:35 pm

Please clarify if the threshold limit of Rs.20Lacs exemption for GSTIN includes inter-state clearance value also or only intra-state value.I came to read a news that this 20 lacs threshold is only for the intra-state cleance value. if inter-state sale is there than this threshold limit is not available.pl let me clarify.

Threshold limit of Rs.20.00 Lakh is in case of Intra-state transaction only. I.e. if you are dealing in inter state supplies than you have to take compulsory registration without any limit as per schedule V. For Further detail you can call me at 9545-727-818